Better Home & Finance Holding Company (BETR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Better 2.0 shareholder conference call. [Operator Instructions]. This call is being recorded on Tuesday, October 6, 2026. I would now like to turn the conference over to Vishal Garg. Please go ahead.

Hi, everyone. Welcome to Better 2.0. This is our first all shareholders welcome call ever in our history as a public company. And it's in thanks to our regular common shareholders that we are here today. We want to recognize the craziness that has transpired over the last 2 months with the company. We want to thank you for your patience as we work to make a Better, better. And we want to thank you for your confidence and support in bringing myself and a new team on to the Board to help right the ship and get better back on a path to profitable growth. So with that, we've got a couple of slides for a presentation that we want to just share with you. And then from there, I want to spend a lot of time answering your direct questions unfiltered. So let's just go to where we're at. 52% of all the voting shareholders voted to put us back in. When we started this proxy consent process, our lawyers told us that 1.7% of proxy contests seeking to replace -- the number of board members we were CPT in to replace are actually successful over the last 10 years. So it gave us 60 to 1 odds and I said, well, the percentage of start-ups that make it to getting to $100 million of revenue is about 10 basis points. So that's 1,000 on odds. And the number that make it to over $1 billion in revenue and have ever public is 0.01%. So that's 10,000 on odds. So why not? Let's do 60 to 1 of, let's do it. Then they told me I'd have to fight it with my own money against a team that was funding it with the cash that the company had. And I said -- and they told me that it might take a year. But thank you to all of you who enabled us to win this clean fight through the will of stockholders submitting green consent forms that they received in the mail from us and sending them back where UPS or the regular mail to us and honestly, to do it in such a record time in 2 months instead what people said would typically to happen 12 months or more. I have learned so much in the 8 weeks that I was away. I had a chance to really think about the things that I am good at that our company is good at and what we both need to get better at and you're going to see those learnings manifest themselves in how we run Better 2.0, realizing what we have long said that there's a $100 billion market cap company hiding in here in this business, there's a capacity to make the American dream of homeownership cheaper, faster, easier and better and bring and make Better into a household name. And that is what the next couple of years is going to be all about for us to focus on creating shareholder value by creating value for customers, value for our business partners and value for our employees. With that, move to the next slide, please. So we published a plan outlining our 90-day priorities. When I heard from many of you over the last 8 weeks was that you were happy that we were sharing what we were going to do and that we were going to be reporting back to you on a report card basis through sessions like this and publicly how we're doing. So the first item on our 90-day plan was reconstituting the Board, which we have done, Watch for more and better board members to come. But the ones we have already are very, very impressive and I think a substantial upgrade. Two, appointed an interim CEO. We have a candidate identified and we are finalizing our engagement with them. There were many of you and many detractors who felt that I would come back and I would not appoint an interim CEO. I want to let you know that we intend to prove you wrong. We will be appointing an interim CEO in short order. Three, improving operating efficiency. We talked about improving operations efficiency and we have done so. I think you all might remember the deck that I uploaded where we grew volume from $600 million a month -- a quarter to $1.6 billion a quarter while keeping operating expenses the same. We're going to increase revenue and volume while bringing them down going forward because we were just really getting to the inflection point of AI making a difference in this business and having try to do all the things that I had to get done over the last 8 weeks pretty much with myself and my legal team and the AI, I think we're more AI pilled than we ever have been before. Four, growth in men and our HELOC business. Hokis a no-brainer in a market where it's 7% plus mortgage rates. We have $21 billion and $21 trillion of home equity that American consumers have $1 trillion of debt that they have, of which $8 trillion plus has been put on since the pandemic ended. And we need to use that home equity to pay down the other more expensive set of debts that consumers have and to enable them to improve the houses that they have because they're living in them longer. And we plan to be the best place for anyone to get a home equity line of credit in the country. And so you're going to continue to see us focus on growing that. I want to remind you that we have a unique solution in the market compared to both mortgage companies that offer partnerships like UWM, Rocket and others and HELOC companies like figure that offer partnerships. We are the only platform that does HELOCs and mortgages with the best solution for a customer, a mortgage broker or a partner, a fintech or brand partner than any of those people. And the consumer can move seamlessly between products and can be upsold or down sold a number of products. And we think that, that is one of our core value propositions as we seek to grow our partnerships in this channel to continue to drive growth. Five, so the U.K. bank. Before August when I had to depart, we had lined up a buyer. We got in here and we have finalized terms with that buyer. We have had that buyer now deposit $10 million in escrow, and we are rushing to get PRA approval for the sale of the bank that we believe will release between $65 million or so of cash to better maybe more, maybe less, depending on the bank's book loan book and what happens with the bank's operations in the coming months at, that should enable us to have a total combined cash balance as we disclosed of over $140 million and a very, very long runway to fund the business, considering the tangible net worth covenants on our warehouse lines around $35 million, which basically means there's $105 million of cash to power operations and almost 2 years plus of runway. To do that, assuming no improvement whatsoever in our burn, which, as you know, we're not going to let happen. And then the last is with that liquidity that we have, to focus on bringing the company back into a place where it was prior to August 3 for shareholders. That was $27 a share and then to fair value. Because as you all know, AI mortgage platforms in the private markets trade for anywhere between 10x to 40x revenue. And here we are today, trading at less than 1x revenue for the only proven AI mortgage platform in the entire mortgage industry end to end. And so I think the company's shares and so do our Board are unbelievably cheap and we plan to pursue a repurchase plan as soon as practical. Now on to the next. The 2 new directors that we brought on board, Steven Sarracino. His fund activant has invested about $100 million and better. He has real skin in the game. And he is delighted to be back on the board and be accidents represented on the board. Steve was with us for 5 years during our Gogo years in 2018, 2019, 2020, 2021, when we grew the business 100x, and he's delighted to be back to help us grow 100x again. Bing Gordon. One of the co-creators of Amazon Prime, head -- Chief Product Adviser to Jeff Bezos, Silicon Valley Legend, Cofounder of Electronic Arts, creator of many of the video games that we grew up playing and remember fondly amazing at consumer and user interfaces that will delight not only our customers but also our business partners, customers across a variety of utility functions and a well-known public company board member. Go to the next slide, please. Our coming CEO search is kicked off already. We are getting proposals from search firms and we expect to hire a search firm and get this kicked off. ASAP to bring a Rockstar CEO with the appropriate background in credit, AI and fintech into the business to support and manage the growth of this business and particularly a lot of the components of running a company that I don't think I'm particularly well suited to do. I joke that I've been the interim CEO actually for the last 12 years because honestly, I didn't set out to be the CEO, I was running an incubator. I was having a perfectly nice time. and we got involved and we kind of started better. And I was like, okay, we're going to get a CEO and then the Series A investors are like, you need to be the CEO, and so I think here I have, I was drafted into the plan, and I'm looking forward to drafting someone else into the plan. Page 14, please. Here are the goals? We're going to launch HELOCs on Credit Con and we are gunning at it. We are so pumped to do it. There's such a broad cross-section of American consumers. That $21 trillion of home equity wealth, so much of it. So much of it, 60% plus more of it resides with the credit Karma users. And we want to go after that in a programmatic way, in a way that has never been done before on Credit Karma. So we are super pump to make that happen. We signed that deal just before my departure in August, we signed it in late July, and we're pumped to get that goal. We have 5 additional household name partners that we were in late stage to middle stage conversations with. Those stalled under the last regime, we are going to work to try and close as many of them as we possibly can. Some may have moved on some may get delayed, but we're going to work really, really hard to do that. And each of them was going to be pretty significant. We are focused on optimizing our workforce to do the work that AI cannot do. We are an AI-native AI-first company. Our first job is to not have humans do the task and then have the AI do the tasks that the humans cannot do. Our first job is to have AI do the task, and then humans do the task that the AI cannot do. And so we really need to have that right ethos in order to continue to drive the lowest cost of production in the industry, the fastest response time in the industry and the usage of human, empathy and sympathy and understanding in the areas that it's most powerful. And that comes with the idea that we need to focus our people on doing things that are valuable, not rote and pay them for that. Our fund locked up on conversion. We have an amazing funnel. And to date, we have not been able to fully monetize that funnel because we have traditionally in the past, serve a self-serve customer. The people who are getting mortgages or taking HELOCs today are not all self-serve. We have one of the widest credit boxes in the industry that is created by the marketplace that we have built and now over 65 institutional partners bidding on a loan-by-loan basis, NASDAQ for loans, something that is completely underappreciated about this company. On a loan-by-loan basis, we have them. But like we need to make sure that the consumer is guided and worked with through that entire pathway. So to go from a volume-based mentality to a no customer left behind mentality, in our mortgage factory. And then lastly, our partner coin base launched about 1.5 months ago. That launch went really well. We need to increase the surface area of assets that coin-based customers have that they can pledge to be able to buy a home. The higher interest rates go up, so lower affordability becomes and so the more consumers need their cash surplus or cash reserves to pay their monthly mortgage rather than use for their down payment. So the -- actually, the attractiveness of the token back mortgage increases as equities, bonds, tokenized assets increase in value and rates go up. And so we think this is a unique method for us to continue to grow the business, while other true. Go to the next slide, please. That is the final one. Okay. So I've just talked for a little while. I'm going to now open it up to questions.

First question is from Owen Rickert at Northland Capital Markets. Is there a specific cost structure or run rate you're targeting under the new cuts? And what's the realistic range of outcomes for hitting breakeven in 2026 versus slipping into early 2027?

That's a great question. I think you can tell from my top track earlier with the sale of the bank, we have plenty of runway. We have 2 ways to get there. So the first way is continue to lower the cost point of the company, which is sort of the operating expenses of the company. And we need to get that down from $65 million a quarter down to something in the range of $50 million a quarter. And then from there, like despite the environment, we can make some money or we need to get the revenue up from the 50s a quarter up to the 65 plus a quarter. And so those are the 2 pathways. We're going to try to do both of them and we get halfway to our goals in either direction, we're at breakeven. So I think that's the path that you're going to see us get there. Actually, let's just try to answer all of them you want. Will you disclose the unique comments of the partnerships? Will you disclose the rough expected time lines of the partnership brand? What's the targeted time line to achieving breakeven $50 million EBITDA, $100 million EBITDA, Day [indiscernible] from Amazon. We will not break out the partnerships on a partnership by partnership basis for unit economics. I can tell you that we always have and for the last, I think, 6 quarters disclosed unit economics for the business as a whole. And so you should expect to see that and continue to see that and be able to judge that. Two, the pathway to $50 million of EBITDA and $100 million of EBITDA. I can tell you, I have a very specific pathway to $50 million of EBITDA. And that pathway requires us to improve the conversion rate across our funnel from lead to lock and lock to fund through superior management of our workforce and superior targeting of their work efforts just to industry standards. And if we were to get them to industry standards of what it is from a lock to fund perspective, right, we would improve lock to fund by 50%. And if we got it to industry standards on a lead-to-lock perspective, which is what happens once they start talking to a loan officer, -- we increased it by another 50%. And that would almost double our revenue while keeping our cost structure the same. And that, I think, is the fastest path to $50 million of EBITDA and $100 million of EBITDA because then the surplus would allow us to invest more in marketing. And I think that, that is a unique, unique lever. We can continue to grow the top line by signing more partners and doing more business and having the best possible product funnel out there. But we do simply need to focus our efforts, and I hope the new CEO will be able to help me do that on enabling us to have an operations function that is able to perform at least to industry averages. Why have you not done this before in terms of achievement of industry centers? What are the plans for wholesale? Okay. I think there's 2 questions there. So why have you not done this before in terms of achievement of ministry centers we used to. We used to beat the industry standards in 2018, 2019, 2020 and 2021. And then we changed, the culture changed. And the culture became much more about experience than about agency and achievement. And I think we need to go back to that. Better 2.0 is a return to the better that was growing 300% a year in 2018, 2019, 2020, 2021. And that is based on -- in particular, if you think about what AI native companies focus on, they hire for ambition. They hire for agency, they hire for achievement. And that is what we need to do again. Two, I think the question around what is the plan for wholesale? We are full speed ahead on wholesale. We think the wholesale channel has extraordinary potential for us between what our AI is able to do and the 2 leaders in the wholesale channel, Rocket and UWM and what their cost structure is. We see there to be a significant role for a third option in wholesale. One, where you can come in and deliver a loan and get an instant response for your customer and at the lowest rate just like what we do in D2C. And for the longest time, we were focused on D2C and large partners. And now we will serve and partner with all partners. And we look forward to empowering the mortgage brokers of America to deliver a cheaper, faster, easier and better loan, a better home to their customers through better wholesale. Vishal, what will be your position at Better? Will you still be the face of the company? Or do you expect the new CEO to meet that? I expect to continue to be the face of the company. And I expect the new CEO to contribute, and I expect our other management team members to contribute. I think you'll see a lot more of all of us. There are so many new surface areas that we are covering. We used to be just a D2C company. Then we became D2C and retail, and now we're becoming D2C and retail and wholesale. Each of those areas have their own specific audience and we have to find the person that is best able to meet that audience where they are. I think what I invest at is helping to build a future that makes the product delightful for each of those audiences. And so I think you'll see us be more focused on that. You said that during the 2 months that you were out, you had time to reflect on what you were very good at. Did you also reflect on the things that you were not good at and the things that need to change. Mike operator? Yes. Very much reflected on the things that was not good at. It's very -- when you wake up in the morning and you know the things that are harder for you because you don't have any support at all, it's just you -- it just becomes much clearer what's harder for you and what's easier for you. What you'd like to do, what you don't like to do. The things you like to do, you get off your list really quickly when it's just you and the things you don't like to do, they're sitting there at the bottom of that pile still for the next day. And so I think the things I'm not good at are -- so let's be super blunt communication with empathy. I have a very hard time understanding and caring about feelings of people that are illogical and contra to what the math says. I grew up a Matek -- that's how I buttered my bread. That's how I got out of Queens. That's how I came to be an arbitrage in Manhattan instead of a hustler and Queens. And to be blunt, I never had -- because I was so good at math, I never had to learn the people's skills. That most people do in corporate America. And I think that served me well when I think some of those things were okay, but we live in a different environment now with a different labor force than we did before. And I think that real leaders are able to lead with empathy while driving results. I'm able to drive results without empathy. And so I can't be a real leader of the company. We're going to get a real leader of the company that can drive results and take the things that I'm really, really good at and then drive them with empathy. Can you shed light on the near-term actions under your control to improve volume and EBITDA profitability by channel, starting with Credit Karma by partners. Look, when it's a partner, they determine how much flow comes in. They determine how much they open the aperture. They determine the flow. So we can't control that. What we can control is how fast and how well we convert the ones they sent through. And as you know, the volume coming through CK as it ramp was significant. If it wasn't for the Iran conflict, that volume would have been massive and taken us well above the target that we had set out earlier in the year. Nobody planned for what has happened. Nobody planned for $100 oil. So I think refi is challenged. But the fact of the matter is, is last time rates were this high, refi was composed of 50% cash out and 50% rate term refi and that was in the mid-2000s. And during that time, the HELOC product was a multitrillion dollar product for the American banking system. Most of the American banking system is currently not in the HELOC product. They want to get back into it, but they're not -- so that leaves a chasm open for us to sell, and we think we can fill that -- and so I think that's where you're going to see us sign up partners, that's where you're going to see volume come through from these partners. And as they open up their customers to us, that is something that we can control and that we're going to do a better and better job at by empowering ourselves and our humans and the AI to do as good of a job, if not better than anybody else in the industry. In today's technology environment, a lot of lenders have built or are building their own versions of what originally may commence such a differentiator for better. you think that technology moat is narrowing over time and making better and less differentiated than it was a few years ago, looking 24 months out, what do you see as Benner's biggest competitive advantage that will meaningfully separate from the other lenders. Yes, I want to be super blunt about this the other lenders are putting lipstick on a pig, they got nothing. The reason is that fundamentally, the LLM models remain core at math. -- and core at math on multiple recursive functions. So if you think about a typical function where the error rate on a typical LLM, if you just dump Fannie Mae guidelines in there and you tell chat look at it, sometimes the error rate can be like 30%. So if on 1 function, just calculation of income, you're at 70%. Then calculation of debt -- then some of our debts. So now we are at like 3 functions, 0.7x 0.7 at 0.49 x0.7 again, right? We're at 0.35. So you're at a 65% error rate on 3 tool calls. That's before even calculating the DTI and then running the recurs a function on how to fix it. So other lenders, if they're all they're doing is this simple front end on top of a LLM at the back end, which is the bulk of what they have, they can't actually use it, which is why the average cost to produce a loan in the industry after all the other lenders started copying or AI or started implementing AI remains $11,700 per loan funded. The reason why some of the most sophisticated counterparties in the mortgage industry and in fintech are choosing to use us is that we have built an LLM engine on top of a machine learning deterministic engine that brings the correct answer all the time. in Man's error rate is 6 basis points on a critical defect basis. That's 99.94% accuracy across over 10,000 parameters that are checked in a mortgage manufacturing process. Two, inman is the MCP. That is very different from others who have to have multiple connectors, connecting into old-school software and systems of records. A system of record simply cannot see the calculation layer, the record layer the communication layer, the decisioning where, the investor matching layer, all of that stuff. Only [indiscernible] MCP does that. So what you will see is that the AI agents become even more sophisticated, right, what you're seeing out of use or instinct or any of those guys. And then they build connectors, you're going to see Tinman return responses just like you saw in our old Chat GPT demo from April, May and while everyone else is returning options. And I think that you're going to see that differentiator. So actually, that -- and then the last thing is, we have tested this and then back tested this on over $110 billion of originations through cycles and across the entire product suite in mortgage. No one else has that. And so we have all the communications that took place. We have all the back in force that took place. We have all the changes that the underwriters made to the decision file. We have in recording all of this manarically since we started on January 2, 2016. And no one else has. People thought we were going to boil the ocean with what we're doing. But now that data, that learning data on $110 billion of production is so valuable. And I think those 3 things together, no one else has. I think you're going to see us actually run faster going forward. Congratulations to you and the entire company for finding through a very crazy and unnecessary time that was self-inflicted in my opinion, by a negligent board. With the mortgage factory being a top 3 priority, please discuss how you're going to inspire that workforce to perform above industry centers. Is that going to be you, you and the interim CEO, and shareholders help you find great rock stars to join better seen -- do I have an e-mail we can refer to? How can shareholders help the company? Talking about net -- that is an amazing question. We need all the help in the world. Let's be honest, we trade at 1x revenue. We trade at a lower revenue multiple than store-based lenders. -- physical store-based lenders. We'd have a higher multiple if we open stores around the country in malls than if we were digital. So we need all the help in the world. We need to inspire our people just as much as we need to inspire the shareholder base, we need to inspire our partner base. And the best way to do that is to hire amazing people. So if you know ambitious, aggressive, high agency somewhat intelligent people who can run through walls to help families achieve the American dream of homeownership, we would like to meet them. And you can send them all -- just like our customers have the right to send them to and respond to me at any time, bjdbetter.com, you can send them to me at vg@better.com, and me and my team will respond to each one individually. We promise you that the ability to make -- the American Dream better using AI is such a meaningful and rewarding challenge it makes you feel warm every time you come in and every time you leave the office, there are lots of ways to make money in America. There are lots of ways to make money with AI. But there's like only one way to make money through AI by making America and the American Dream Better, and that is here at Better. So if you can use that message to help us find these people, that will be amazing. As a team operation, every one of us on the team today hear better feels that way. Every one of us. And so all of us are part of that process, all of that are part of that challenge. Digital leadership dispute have a negative impact on execution and our partner relationships. It stalled a number of partnerships that were in play. That is the truth. We may have lost 1 or 2 who went and decided to pick someone else or the incumbent, where we were playing David versus glass. But the pipeline is very full. Those partners aren't going away. And many of them have stood by waiting for us to come back because even while I was gone, I was keeping them fully abreast of what was going on, and our team here was holding down the fort. We have an unbelievable Rockstar tech team, our product is superior to all of the other places. There's nowhere else that you can get mortgage and HELOC in a box, all done for you instantly and with the fastest implementation turn times and across a broad cross-section of investors with the highest approval rates and the lowest interest rates in the industry. So the product utility functions that a multiple time user, like a business partner chooses to see or seeks in a partner, we have all of those. Now we just need to get out of our own way and go and close them. What is the NASDAQ Board cure plan and the time line for a permanent CEO out markets. The Nasdaq Board Turpin, we have 45 days to submit a plan in 180 days secured. So we're going to do that in very short order. We've been out there recruiting people to join the Board, bringing in friends and understanding people who have been interested in part of the better family in different ways. And so you should expect to see us bring people on to the board that will be extremely impressive. Two, the -- what was the second question? The time line for a permanent CEO. Look, the CEO searches take 3 to 4 months. We're getting the term in. And so let's assume Q1 2027. It's October 8 today. How do you plan to recruit empower top software and AI engineering talent Hardik Gupta? Hello, Hardik. The same way we recruited you back in the day, Hardik, we gave you mission on top of money because there's a lot of ways to make money as an AI engineer. You sit there making money like optimizing Facebook ads for like dental implants or you can like make money optimizing certain processes in a different place. But I think the way that better makes money, I think there's only one real company that's very close to that, and that's Palantir and Better makes money by making the American dream better. And I think that's always been the play here. And I think that's how we have always recruited a team. And that's how our tech team is here today building the best AI in mortgage in secured financial services and secured lending. And they get to work on a great challenge. And in every day, they get to help American families save $22,000 on the purchase of a home, and that is an extra bedroom. That's a better backyard. That's a better commute, a better school district. It's a better house. Will you be Chief Innovation Officer or carry a different title. I don't want to only think I'm going to be chief anything. I can make a joke, like I think we need more Indians in chiefs. But -- and I can get away with it because I'm Indian, but I think my goal is to like increased the tempo in the company, increase the energy in the company. And I think my goal is to be -- to bring the best out from the tech and the people and so maybe I should be like the Chief Motivation Officer, the Chief Energy Officer. And I think that's probably what I'm going to do. But I don't really care about the title. It doesn't matter. The goal is to like make Better, great. Will Better allow independent retail brands to operate on the platform outside of Neo? Or do you see Neil remaining the primary retail brand strategy. Really great question. open for discussion. It depends like, honestly, I think the way to think about it is Amazon third-party marketplace, right? And like, of course, Bing Gordon has taught us a lot about that. But why would we not let multiple stores exist on better just as multiple brands exist on better, right? And if we're willing to have multiple brands exist on better, especially in places where they're not necessarily always in competition with each other and gives us geographic reach, why would we not do that? I think that's our goal. If we're going to be a platform for the industry, we have to allow multiple wholesale brands, multiple retail brands, I think we publicly disclosed, we've signed up over like 10 wholesale partners. We'll have more details on the new ecoprogess, but like -- we should involve multiple brands and multiple partners to exist on our platform. What else. Last question. And I think what we've seen this on comments on X is cash runway, any need for a capital raise in the next 12 months. I think we expect the bank to be sold in the next 3 to 4 months, and hence, we do not anticipate any need for cash infusion for the company as we try to get to breakeven and beyond. Are you considering releasing preliminary Q3 earnings in the next few weeks? I'm back day 2. I'm just getting my hand on things. So I don't know. I don't even know what the benefit of that would be, but maybe -- I don't think I answered your question, but like that's the honest answer. Okay. Of course, you guys have more questions, many of you haven't spoken up. Feel free to send all and any questions you might have to vgdbetter.com unless it's super confidential or something I'm not allowed to talk about. I will do my best to answer them just like I do my best to answer all consumer queries. So you are all important. Thank you for supporting us. We care about you. We are sorry to have disappointed you. There's a $100 billion company hiding inside here. I have $20 million plus of my own money in this business. I've never sold a single share. I'm currently working for $1. So I believe, and I know many of you believe in Better and believe in me, and we thank you so much for that belief. We do not take it lightly. It's the reason I'm back. Thank you, and here's the Better 2.0. See you next time.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.